Jason McDonald sold his business a few years back for about $645 Million. (You can assume...

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Jason McDonald sold his business a few years back for about $645 Million. (You can assume he sold it at the end of 2011). He originally purchased the business at the end of 1992 for $117 million. Back in 1992 the S&P 500 stock market index was at about $30 and it was about $120 at the end of 2011 (adjusted for splits and dividends). You can assume the yield on treasuries was about 4% over the period and the expected market risk premium was 5.5%. Also, forget about any other cash flows. Assume the whole deal was 100% equity. Based on the purchase and sale price, was it a good deal? Jason McDonald sold his business a few years back for about $645 Million. (You can assume he sold it at the end of 2011). He originally purchased the business at the end of 1992 for $117 million. Back in 1992 the S&P 500 stock market index was at about $30 and it was about $120 at the end of 2011 (adjusted for splits and dividends). You can assume the yield on treasuries was about 4% over the period and the expected market risk premium was 5.5%. Also, forget about any other cash flows. Assume the whole deal was 100% equity. Based on the purchase and sale price, was it a good deal? Jason McDonald sold his business a few years back for about $645 Million. (You can assume he sold it at the end of 2011). He originally purchased the business at the end of 1992 for $117 million. Back in 1992 the S&P 500 stock market index was at about $30 and it was about $120 at the end of 2011 (adjusted for splits and dividends). You can assume the yield on treasuries was about 4% over the period and the expected market risk premium was 5.5%. Also, forget about any other cash flows. Assume the whole deal was 100% equity. Based on the purchase and sale price, was it a good deal? Jason McDonald sold his business a few years back for about $645 Million. (You can assume he sold it at the end of 2011). He originally purchased the business at the end of 1992 for $117 million. Back in 1992 the S&P 500 stock market index was at about $30 and it was about $120 at the end of 2011 (adjusted for splits and dividends). You can assume the yield on treasuries was about 4% over the period and the expected market risk premium was 5.5%. Also, forget about any other cash flows. Assume the whole deal was 100% equity. Based on the purchase and sale price, was it a good deal?

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To determine whether Jason McDonalds business deal was a good one we can calculate the returns using ... View the full answer